Critical Contrast: Radian Group (NYSE:RDN) vs. Assurant (NYSE:AIZ)

Radian Group (NYSE:RDN) and Assurant (NYSE:AIZ) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their analyst recommendations, earnings, risk, dividends, profitability, institutional ownership and valuation.

Insider & Institutional Ownership

95.3% of Radian Group shares are held by institutional investors. Comparatively, 92.7% of Assurant shares are held by institutional investors. 2.0% of Radian Group shares are held by insiders. Comparatively, 0.5% of Assurant shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Radian Group and Assurant’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Radian Group	46.99%	13.07%	6.98%
Assurant	6.81%	18.65%	2.92%

Risk & Volatility

Radian Group has a beta of 0.77, suggesting that its stock price is 23% less volatile than the S&P 500. Comparatively, Assurant has a beta of 0.56, suggesting that its stock price is 44% less volatile than the S&P 500.

Earnings & Valuation

This table compares Radian Group and Assurant”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Radian Group	$1.20 billion	3.85	$582.64 million	$4.15	8.24
Assurant	$12.81 billion	0.85	$872.70 million	$16.97	12.94

Assurant has higher revenue and earnings than Radian Group. Radian Group is trading at a lower price-to-earnings ratio than Assurant, indicating that it is currently the more affordable of the two stocks.

Dividends

Radian Group pays an annual dividend of $1.02 per share and has a dividend yield of 3.0%. Assurant pays an annual dividend of $3.52 per share and has a dividend yield of 1.6%. Radian Group pays out 24.6% of its earnings in the form of a dividend. Assurant pays out 20.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Radian Group has increased its dividend for 6 consecutive years and Assurant has increased its dividend for 21 consecutive years.

Analyst Ratings

This is a summary of recent ratings and target prices for Radian Group and Assurant, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Radian Group	0	3	3	1	2.71
Assurant	0	2	8	0	2.80

Radian Group currently has a consensus target price of $40.20, indicating a potential upside of 17.56%. Assurant has a consensus target price of $256.83, indicating a potential upside of 17.00%. Given Radian Group’s higher possible upside, research analysts clearly believe Radian Group is more favorable than Assurant.

About Radian Group

Radian Group Inc., together with its subsidiaries, engages in the mortgage and real estate services business in the United States. It operates through two segments, Mortgage Insurance and Homegenius segments. The Mortgage Insurance segment aggregates, manages, and distributes U.S. mortgage credit risk for mortgage lending institutions and mortgage credit investors, through private mortgage insurance on residential first-lien mortgage loans; and other credit risk management solutions, including contract underwriting. The Homegenius segment offers title services, including a suite of insurance and non-insurance titles; tax and title data, centralized recording, document retrieval, and default curative title services; deed and property reports; closing and settlement services; mortgage underwriting and processing; escrow; appraisal management; and real estate brokerage. This segment also provides real estate valuation products and services; asset management services for managing real estate owned properties, which includes a web-based workflow solution; and a suite of real estate technology products and services to facilitate real estate transactions, such as proprietary platforms as a service solution. It serves mortgage originators, such as mortgage bankers, commercial banks, savings institutions, credit unions, and community banks; and consumers, mortgage lenders, mortgage and real estate investors, government-sponsored enterprises, real estate brokers and agents, and corporations for their employees. The company was formerly known as CMAC Investment Corp. and changed its name to Radian Group Inc. in June 1999. Radian Group Inc. was founded in 1977 and is headquartered in Wayne, Pennsylvania.

About Assurant

Assurant, Inc., together with its subsidiaries, provides business services that supports, protects, and connects consumer purchases in North America, Latin America, Europe, and the Asia Pacific. The company operates through two segments: Global Lifestyle and Global Housing. The Global Lifestyle segment offers mobile device solutions, and extended service contracts and related services for consumer electronics and appliances, and credit and other insurance products; and vehicle protection, commercial equipment, and other related services. The Global Housing segment provides lender-placed homeowners, manufactured housing, and flood insurance; renters insurance and related products; and voluntary manufactured housing, and condominium and homeowners insurance products. The company was formerly known as Fortis, Inc. and changed its name to Assurant, Inc. in February 2004. Assurant, Inc. was founded in 1892 and is headquartered in Atlanta, Georgia.